More Players Needed For Trump's Wall Street Game Plan

06/14/2017

While Wall Street banks do not expect significant change any time soon, they however cheered U.S. President Donald Trump's plans to loosen the leash put on them in the wake of the 2008 financial crisis.

Rather than requiring legislation from Congress, executive order and through regulators can be the way for the bulk of its plan for overhauling bank regulation, the Trump administration has said. But in order to carry out his agenda, Trump is months away from installing top officials at key regulatory posts.

"We won't see policy changes before the end of the year," said Rich Foster, senior counsel for regulatory and legal affairs at the Financial Services Roundtable, a trade group.

While only Congress has only approved appointment of Exchange Commission (SEC) Chairman Jay Clayton and Treasury Secretary Steven Mnuchin, Trump has gradually been nominating heads of financial agencies. Other agencies have leaders appointed by Trump's Democratic predecessor, Barack Obama or are operating under "acting" chiefs.

The Federal Reserve is considering other steps to simplify the process, in line with Treasury's recommendations and has already signaled it will make its stress testing of banks more transparent.

But including having the Fed overhaul its testing models and assumptions, the Treasury called for even more significant changes. But until the administration has appointed a vice chair in charge of banking oversight at the Fed, such changes may have to wait.

Sources have told the media that Trump's pick for the Fed's top bank regulator could be Randal Quarles, a veteran of the George W. Bush administration. While he is being vetted by the Federal Bureau of Investigation and the Office of Government Ethics, he has not been named publicly.

But due to an upcoming five-week congressional recess from the end of July to the beginning of September and with Congress facing a busy calendar, confirmation of his name, one he is named, by the Senate could be a process that could easily slide into the fall.

For a financial regulatory nominee to receive Senate confirmation after being announced, it has taken an average of 149 days since 1989, analysis by the Bipartisan Policy Center, a Washington think tank, has found.

Quarles has declined to comment on speculation about the possible nomination.

Meanwhile, while the Senate considers Joseph Otting for the top role, an interim Trump pick, Keith Noreika, is managing the Office of the Comptroller of the Currency.

Otting could face a contentious confirmation even though being nominated earlier this month. Citing his time as an executive at OneWest Bank and that firm's foreclosure practices, already announcing his opposition has been Senator Sherrod Brown, the top Democrat on the Senate Banking Committee that will consider the pick.

Awaiting full confirmation to take on the role full-time also is Christopher Giancarlo, the acting chairman of the Commodity Futures Trading Commission, in addition to Clayton at the SEC.

But Obama appointee Martin Gruenberg intends to serve his full term, which expires in November at the Federal Deposit Insurance Corporation. Given his role in drafting many existing rules, resistance from him could be faced by Treasury's plans to ease some of the restrictions around banks' trading, living wills and their adherence to international banking accords.